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Willis makes promise of better times

There were no surprises in the Budget 2024 announcement yesterday.

Words and phrases we’ve all become more familiar with since the Coalition Government came to power at the end of last year were in full force, including references to the “squeezed middle”, “hardworking New Zealanders”, and “prudent and fiscally responsible”.

There were the expected reminders that the coalition has “a clean-up job” on its hands after “six years of economic mismanagement” by Labour, as well as the anticipated expectation setting:

“This is one step of many … there is much more to do”.

But, Finance Minister Nicola Willis was also keen to reassure New Zealanders that “with this Budget, better times are on the way”, and for low- to middle-income households, as soon as July 31 in the shape of tax relief.

The “fully funded” $3.68 billion tax relief package includes reducing personal income tax for the first time since 2010, by increasing personal income tax thresholds.

For example, people currently earning up to $14,000 per annum pay an income tax rate of 10.5 per cent. From July 31, this tax rate will apply to earnings up to $15,600.

According to the government’s figures, 1.9 million households will benefit by $60 a fortnight from the tax package.

Health also receives a boost this year, and pre-committed health funding for the next two Budgets. The $8.51b package includes $3.44b for hospital and specialty services, just over $2b for primary care and public health, and increased funding for disability support services.

Also, $31.2 million will “gradually extend free breast screening to 70-74-year-olds over the next four years”, and the nation’s ability to buy the drugs it needs will be given a $1.77b cash injection for Pharmac

But, some of the squeezed middle’s tax relief will have to be spent on prescription costs, with the reintroduction of the $5 prescription co-payment for those 14 and over.

In line with the government’s election commitments and priorities, there is some money for law and order and education initiatives.

New schools and classrooms will be funded to the tune of $1.48b, structured literacy will receive $67m, and there’s $153m to establish charter schools.

The thin blue line will get a little thicker with funding for 500 extra police officers, and $1.34b will boost the number of Corrections officers.

But the context for this spending is one of the lowest operating budgets since 2017 [at $3.20b], the need to tighten the belt around an inherited “bloated” state, and an iron-clad commitment to achieving a surplus by 2027/28.

Some things have to give.

Those visible by their absence in the Budget are older New Zealanders, Māori and Pasifika people.

Not that you heard that from Willis.

Her most strident “I utterly reject that” reposts were in response to suggestions from reporters at the pre-announcement stand-up that $300 million had been cut in the Budget from initiatives for Māori, and there was no investment in the Pasifika community.

“Maori have everything to gain from a stronger economy,” Willis said.

“When Maori show up at emergency departments they show up as New Zealanders.”

However, as the reporters were probably driving at, the “rising tide lifts all” mantra only works effectively if the sea floor is a “level playing field”.

While there might be a little “jam tomorrow” for some New Zealanders, Willis was at pains to point out that the Budget is an ongoing process of “looking for waste and rooting it out”.

A point laid bare in Treasury’s analysis accompanying the Budget: “Future Budget allowances are unlikely to be sufficient to cover future cost pressures on existing services,” it said.

In other words, more cuts may well be on the horizon.

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